RBI likely to slash policy rates by 100 bps in FY21: BofA Securities

Analysts at BofA Securities, in their July 26 note, have predicted contraction of Indian economy, as measured by gross domestic product (GDP), at 6 per cent in fiscal year 2020-21 (FY21) as their base case.

BofA expects the monetary policy committee (MPC) of the Reserve Bank of India (RBI) to slash policy rates by 100 bps in FY21 (earlier expectation: 75 bps) as base case, with inflation set to slip to 2.5 per cent in the second half of the fiscal year (H2FY21) from 6.3 per cent in July.

That apart, they expect the government’s overall fiscal deficit to rise.